Talk show host Rachel Maddow recently made Michigan
Gov. Rick Snyder the focus of an on-air attack on his policies during a
seven-minute tirade on her MSNBC show.

Maddow
suggested that Snyder was
fabricating a budget crisis to get his agenda through.

Mackinac Center for Public Policy fiscal policy experts
Michael LaFaive and James Hohman commented on a half dozen of the statements
made by Maddow:

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Maddow: “Rick Snyder has proposed an actual tax
increase … on seniors and on poor people.”

Reality check:

“He is taking away exemptions on pensions and the earned income
tax credit,” Hohman said. “This is not ‘raising taxes’ so much as removing
special tax treatment. In fact, his plan lowers the actual tax rate on everyone
from 4.35 percent to 4.25 percent, obviously including seniors and poor people.
‘Raising taxes on seniors and poor people’ implies that he’s carving out
special niches for higher taxation, when the proposal removes special
treatment.”

Maddow : “He (Snyder)
is giving it away in the form of $1.8 billion in corporate tax cuts.”

Reality check:

“The Governor proposes to eliminate the entire state’s tax
credit and exemption regime (many of which are subsidies
and thus, corporate welfare) and replace them with a smaller and direct tax,”
Hohman said. “Michigan’s business tax system is complex and hated, and the
governor’s proposal simplifies it and lowers it to encourage growth.”

Maddow:“The governor tells you that you are in a
financial emergency.”

Reality check:

The bill lays out objective criteria for judging the
finances of a municipality.

“There are 18 explicit events that would trigger a financial
review,” says Hohman. “These can be avoided by elected officials well before an
emergency is declared.”

Maddow: “Michigan
Republicans are telling them they are about to lose their right to elect local
government. The Governor is just going to take care of that from now on. You
see, the Governor knows best. This whole democracy thing? Turns out it is very inefficient.”

Reality check:

The Local Government Fiscal
Accountability Act has been in place since 1990 and was signed by a Democrat
governor – Jim Blanchard. Six cities, one village and one school district have operated under an EFM and declarations of
financial emergency were made by both Republican Gov. John Engler and
Democratic Gov. Jennifer Granholm.

“This law actually encourages local governments to fix their
own problems so that the state doesn’t have to do it,” Hohman said. “If local
leaders continually choose to ignore or hide their financial responsibility,
then the state has a process to help the local government avoid bankruptcy. If the local unit continually refuses to
follow the plans laid out, then the state government can appoint a short-term
Emergency Manager. “

LaFaive said the existing law permits the elected officials
to thwart the needed reforms.

“It was the elected governments that failed to respond
effectively in the first place and may have actually caused the problems that
brought the unit into fiscal disrepair in the first place,” LaFaive wrote. “The
state law also gives that unit fair warning about the consequences of not
solving its own fiscal problems.”

“Maddow is apparently trying to
suggest that state involvement in solving a municipal financial crisis is making
government more powerful and that this translates into bigger government," said LaFaive. "This
bill is designed to offer temporary oversight of a city, and in all
likelihood will result in local units becoming smaller and more effective
thanks to the ability to set aside union contracts and save money. Lou Schimmel
used his (EFM) powers in Ecorse and Hamtramck to sell city assets and contract
out services with private, for-profit firms that removed government employees
from the payroll and saved millions.”

Maddow: “Cut aid to
cities and towns so much that a lot of them are expected to be in dire fiscal
straits.”

Reality check:

“Falling property values and increased employment costs will give fiscal stresses to local governments regardless of state aid,” Hohman wrote. “Local government revenue grew at a time when the state’s did not. This was because local government relies on property taxes to a much greater degree. According to the bill analysis and the executive budget, Snyder's plan cuts local government revenue-sharing by $107 million, only a 9 percent cut from last year. Schools are cut 4 percent. According to the Census Bureau, total Michigan tax revenue fell 4.3 percent from 2000 to 2008, adjusted for inflation. Total property tax revenue, on the other hand, increased 18.9 percent.”

LaFaive said some cities were on the verge of collapse
before Snyder took office. Detroit, for example, had to borrow large sums of
money to pay its general operating costs.

The Republican Party fully controls most states and at the national level has captured the House, Senate and presidency. By many measures, the party has more power than it has had in many decades. But will that control last? And, more importantly, what policy priorities are coming about from these political victories?

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